Reported by Dan
Emerson, a freelance writer based in Minneapolis.
Emerson also writes for Healthcare Real Estate Insights.

► Inside the Head of Healthcare
CEOs – What they're Thinking, What They're Prioritizing

Charisse Oland,
President, Oland Consulting

In 1980, healthcare
accounted for 8 percent of total spending in the
country. Now we’re at almost 20 percent. “People used to
say that when healthcare cost hits 20 percent of the
GNP, 'we’re ‘done,’ we’re going to have to change' --
but we’re not changing enough to bend the cost curve.”

To lower costs,
health systems try to push people out of the most
expensive place, hospitals, into outpatient centers and
home. “The solution always seems to be to build another
building.” While the alternatives have value, how does
spreading out systems reduce costs?

Thirty-two percent of
healthcare costs are still in the hospital, where
specialists reside. A lot of money is spent on end of
life care and expensive pharmaceuticals. Everybody wants
to build for the profitable consumer sector, where the
money is... but when someone can’t pay, where do they
go? The emergency department. So, hospitals continue to
carry the debt for unfunded care.

In the “old days,” physicians weren't
employed by hospitals. But by 2000, 15 percent of
physicians were employed by
hospitals/health systems. Today in Minnesota, 80 percent
of physicians are employed by hospitals who also own
insurance companies and carry the full risk of
population health. That’s not all that’s
changing. Many self-employed physicians don't have money
to buy the latest technology and younger physicians
aren't working 24-7, as used to be the expectation. Now,
baby boomer aging is adding 10,000 (seniors) a day to
the healthcare market. And consumers have big
expectations for customer service.

Knowing who is at the table is critically important. When
you create a design team, make sure you have all of your
users at the table, not just the doctors. You need to
include all of the people
including supply chain, facilities, consumers,
etc. Early involvement reduces the likelihood of the 80%
of change orders come after the project is done.

Everybody focuses on whether the project is on-time and
on-budget. What
we really want is on-target -- the right solution for
the problem.

As hospitals acquire physician groups, they are
rethinking design. Facility
designers need to know the system’s resources, system
network, geography, demographics, and brand.

Site-neutral payment reform is growing but
that doesn't change the basic equation. Team-based care
is starting to impact facility design—where instead of
the doctor simply being the
boss, she/he provides care within a team which enhances
quality, efficiency, and effectiveness.

Only 10 percent of being healthy is
attributed to healthcare access. Forty percent of being
healthy comes from decisions we make; another 20 to 25
percent is the social environment. Consider: obesity has
grown from 13 percent of the population to about 35
percent. In nine states it's over 40 percent; about 30
chronic diseases are directly linked to obesity. We're
exercising less. Among children, obesity is at 18
percent; it's 13 percent of 2-year-olds.
The unhealthy trend is frightening. How then will
healthcare systems manage population health?

We are seeing the first generation to reverse the
longevity trend and
becoming less healthy. In addition to the health-related
problems associated with obesity, in 2014 opioid
addiction
caused 25,000 deaths a year, now we’re at 50,000 a year
and growing. We need to change the narrative from
treating healthcare to maintaining wellness.

We’ve been behind the technology curve with digital
health. Some
innovators are now collecting biological data through
smart watches and other devices to predict episodes of
illness and care concerns. In the late ’90s, biotech
proved that if you can manage the vagus nerve you can
manage all kinds of disease. Biodesign, or biotechnology
and bioengineering analytics are coming together to find
new solutions to health problems and reducing reliance
on medication for treatment.

A survey of Midwestern CEOs found the number one concern was
margins shrinking, due to end of life care, Medicare
withhold, Pharma, ED primary care for the uninsured,
insurance network
risks, and workforce costs. Most of these health systems
say their margins are running about 4 percent, with
about 50 percent also dealing with the 2 percent
Medicare withhold for not meeting CMS quality metric
requirements.

Buildings are another issue: should
we double down on the old
buildings that hold extensive and expensive HVAC and
technology infrastructure or build something new
and more efficient?

There is a regional and national workforce shortage of
MDs, as
we are training more specialists and fewer primary care
doctors, leaving an even deeper rural shortage.
Far fewer surgical procedures are done in rural
hospitals anymore, as more complex patients are referred
to urban hospitals for subspecialty care. Rural
hospitals are relying more on telemedicine to maintain
care locally.

Now when you go to the primary care doctor, you
typically see an advanced practice nurse; they can take
care of about 80 percent of problems, so doctors can
handle patients with more complex issues. But nurses are
being overextended as well as aging out and fewer young
people choosing hospital nursing. There are inadequate
numbers of professionals overall to care for the
Boomers. As a result, care delivery continues to change.

Healthcare now is
all about politics. In a recent consumer poll,
56% of survey respondents supported Medicare for
all, 71% supported guaranteed health insurance, 67%
supported eliminating premiums and out of pocket
costs. If Medicare for All comes in, your life as a
healthcare professional or facility designer will be
miserable for a while.

Accountable care
organizations, bundled payments, value-based
payment, etc. are all starting to change healthcare.
Hospitals are becoming smaller centers of
excellence. Health system strategy today is like
building with Lego blocks: you can put things
together in really interesting combinations.

Consumerism and
care management are leading to new care sites,
including urgent care, micro hospitals and
freestanding ERs.

There are two forms
of hospital out-migration: The percentage of
inpatient surgery procedures will continue to
decline; care is also moving from hospital
outpatient centers to off-campus ambulatory care
centers. So, the care being provided in the hospital
is getting more complex. There are incentives for
the shift for payment systems: outpatient surgery is
lower cost, more convenient, and physicians make
more money.

New competitors are
emerging, including CVS Healthcare and Aetna.
Because Amazon can now provide home delivery of
pharmaceuticals for lower cost, there’s a smaller
share of Pharma business for drug store chains.
Plus, insurers like Aetna are building
“hospital-less” delivery networks.

Traditional
hospitals are not going away. Older boomers will
still need high-value services and that will money
into hospitals. But the old Boomer generation will
strain future provider economics.

Hospitals will
experience increasing demand across all service
lines. They will enhance networks to triage lower
risk patients out to “spokes” of the system, driving
more complex, higher-cost cases to the hub.

Non-hospital
services will continue to expand, because we are
going to push as many services as we can outside of
the hospital. The Urgent Care Center Association
reported 8,744 centers in 2018, up from 6,000 just a
few years earlier. Thirty-nine percent are
corporate-owned; 16 percent are joint ventures with
hospitals; 15 percent are hospital-owned. Ninety
percent of urgent care centers anticipate growth;
they’ll average 15,000 patient visits a year, 50
patient visits per day. Only 2 percent of those are
ever diverted to an emergency department.

Twenty years ago,
strategic planning was a “C-suite only” event,
DeBruzzi said. That has changed a lot. We’re now in a
more rapid evolution in healthcare. Strategic planning
has become a very different process and must go deeper
in the organization.

Real estate companies
are becoming advisers and facilitators much more
often than just vendors and providers, Duginske-Cibulka
said. That is happening because not only is there
strategic planning but there is strategic doing. She
added, real estate is not a strategy. It is a tool to
implement your strategy.

Health systems are
moving capital spending and decisions outside of the
individual facilities, into the overall system, under
the finance department. That is leading to much deeper
thinking, Duginske-Cibulka said.

Strategic planning has
changed. In the past, most strategic plans were 3-
to 5-year plans about how to compete better. In today's
volatile and uncertain world, it is about competing
differently, not better. The challenge, Emison said, is
that few executives in the healthcare boardroom are
prepared to think strategically outside of their
experience, so most strategic plans remain focused on
“how can we get better than last year” or “better than
so and so down the street.” That isn't going to be
enough.

Organizations can
become paralyzed around policy change and limited
reimbursement, but it’s important to take action and
push boundaries to evolve in the new healthcare market,
DeBruzzi said.

Looking for your next
site? Anybody can take a map and find where
populations are growing, Duginske-Cibulka said. The
magic comes in thinking deeper about strategic doing.
For example, which service lines are the most
revenue-generating services? Consider multiple data,
define good data from bad data, generate primary
research from your own financials to define where your
true revenue opportunities lie.

We used to think of the
hospital as our billboard, Betti said. It still is,
but the billboard of the future might include MOBs,
hospitals, and even kiosks in gas stations if
telemedicine continues to grow.

Hospitals must start
finding ways to reduce waste. JAMA reported that 25
to 30 percent of healthcare costs is waste; $30 billion
of that is due to lack of coordinated care. According to
Duginske-Cibulka, that translates to a need for more
connected spaces. One system is changing its mindset
from having the patient travel to different providers to
having multiple specialists and providers come to the
patient sitting in one exam room.

One health system is
eliminating the concept of discharges, Emison
shared. The organization Is focused on creating lifelong
affiliations and moving from “sick care” to “well care.”
Still learning how that impacts facilities.

“We should be defining
ourselves by how we make a difference in this world, not
by race, gender, etc.,” Bartling said. “Being a great
leader is an art form. [The panelists] have all shown
what great leaders can be. Developing leadership skills
is something that is often done off the clock.”

“One thing to remember is
that it’s important to take care of yourself first: good
exercise, eat well, get enough sleep and make sure those
relationships in your life are strong,” Myster advised.
“When everything is working well in your personal life,
you are going to be much more effective in your career.

“It’s about energy; how
much gas is in that tank every day is what allows us to
be leaders,” Kummer agreed. “Being able to understand
and monitor that is really critical. I have three young
children, it’s important that I understand what part of
my relationship-building with them is contributing in
filling that gas tank, as well as with my spouse. I’m
thinking about myself being able to contribute not only
at work but also inside of communities.”

“Becoming more involved in
Minnesota and Twin Cities healthcare groups helps my
network because I can't know everything,” Gathje added.
Having that network or ‘village’ to continue to learn
from other people really helps me be successful in my
roles.”

Who has inspired you?

“In my role as a
leader, I often think of my grandmother,” Bartling
shared. “She told me find something I love and be
true to yourself and always be kind to people no
matter how important you are or think you are. She
has been a staple in how I have become a leader
today.”

“A gentleman who ran
the entire lab operation at Mayo taught me the
importance of ‘rounding’ on the entire facility to
find out what is going on, what is going well,”
Myster said. “Decisions we make every day impact the
folks at bedside; if you don't know what is going on
with them, you don't know what is going on. I am
also inspired by caregivers, so I try to spend as
much time with them as I can so I can understand
what they are doing.”

“I’ve been inspired by
my mother, who taught me the importance of
leadership in serving others,” Kummer said. “My
father was an entrepreneur who taught me about the
grit and hard work it takes every day. Really taught
me what my principles and values are. When I reflect
on what my purpose is, it’s to inspire others to
lead, grow, and influence.”

Bartling encouraged the
audience, “We all need to pass on what we've learned to
keep the continuation of strong leaders growing.”

Demand for
convenience care is growing fast. These
facilities are typically situated inside or
adjacent to a large retailer or pharmacy, to
maximize patient convenience for getting walk-in
care for minor injuries, health screenings,
coughs or colds or other routine conditions.

The shortage of
primary care physicians is one driver of the
growth in convenience care. In some markets,
Chamberlain said, the cost of living has gotten
so high that primary physicians can't afford to
live there.

Health systems
are using convenience care to attract people to
their brand. Chamberlain points out that
hospitals are having to shift from their
traditional focus on patients, older people and
the sick to market to the young, healthy person.
With an urgent care platform, systems have many
more opportunities to position interactions with
potential patients.

Many entrants
are coming into the market to respond to demands
for more consumer convenience, Niswanger
said. The desire to introduce new patients to
the system is core to this strategy. Urgent care
and convenience care have demonstrated
themselves as a way to introduce patients to the
system, including the young patients with whom
they want to cultivate relationships over time.

Defining clear
circulation in the renovation of Park
Nicollet’s busiest urgent care center helped
with on-staff resiliency, improved efficiency
and moved patients through faster, Betti said.
The center was built more than 40 years ago,
with long hallways and rooms in the back where
clinicians would sit to do their paperwork. The
design team has re-configured how it does
clinics so that the care teams is situated in
the middle and all of the patient care rooms are
around them. By moving caregivers to the center
of the building, they gained better sightlines
and reduced in door-to-discharge time by about
10 percent.

Park Nicollet
has been working toward a leaner footprint for
future urgent care locations, Niswanger
said. The team has innovated within retail
spaces of 400 to 600 square feet, with two exam
rooms and a front-desk check-in area. It's
nimbler and more patient-centered.

It's important to
understand first cost versus life cycle cost. To do
that, get all the stakeholders—from architects to
end-users—together in one room.

Flooring failures can
be a very costly issue to deal with as they lead to
down time. Have conversations early to understand
the design drivers and the current challenges to
customize the best solution.

Do you always need
premium products in a medical office building
compared to an acute care facility? Probably not,
Morgan says. Being able to value engineer is
important to life safety and fire safety, and to
patients, visitors and staff. Identify necessary
items versus cost saving opportunities early on with
the right people.

One of the biggest
construction challenges today is the need to build
buildings quicker and faster—even when decisions
aren’t always made within the same timeline,
Stegeman says. For renovations, mitigating risk is
the biggest issue.

People sometimes try
to write specs themselves, without having the
necessary product license, Morgan cautions. People
sometimes underestimate the complexity of doors,
frames, and door hardware. You need to know building
codes, life safety codes and ADA codes.

Providers are no
longer looking at B or C sites to build clinics.
Now, they are looking for the highest possible
visibility. Instead of spending $4 to $6 per square
foot, they might pay $14, $20, $30 per square foot.

Frauenshuh is
seeing higher costs of occupancy. It has been a
favorable market for borrowing, which is driving
changes in cost of occupancy.

If you pay more for
land, you want to use less of it. Generally,
providers are needing eight square feet of land per
square foot of building.

There are fewer
good sites around so costs for those sites
continue to go up, Stutz says. For a 10,000 square
foot building, expect to pay $170-$190 per square
foot; for 20,000 square feet, $150 to $170/square
foot; for 50,000 square feet, $135 to $150 per
square foot. But what really drives costs is what
the exterior of the building is made of: steel,
brick, concrete, etc.

Costs really go up
if you try to put ambulatory surgery into a building
that is not set up for that.

Construction costs
have been rising about 4 percent per year. The
biggest driver is labor shortages. There’s a big
push to get trades education into high school and
middle school to encourage people to get into
construction.

Contractors are so
busy, college graduates are getting a premium.
But that becomes unsustainable; the industry can't
continue to bring people who don't have experience
and pay a premium for them. Construction schedules
are being extended because we don't have enough
people. Plus, we’re starting to experience long lead
times on precast material and the cost of concrete
is going up.

We are seeing a
strong 2020 for the overall construction
industry. Most healthcare projects now are remodels,
and infrastructure projects.

► How To get What You Want and Really
Need From the Healthcare I.T. Department When Planning
Your Next Project

Chris Jones,
(left)
Applications Manager, HealthPartners

Rhonda Rezac, (right) Senior Associate, RSP, i_SPACE

The speakers discussed a case study around Regions
Hospital, which sought to get HealthPartners' other
hospitals wanted to get on the same system. They wanted
to add more data and more users without adding
complexity, with just one app.

With a larger company like HealthPartners, there
is a good chance there is a lot of
compartmentalization behind the scenes, with
people divided up into teams. In a situation like
that, it's important to know which team and
specialist you need to deal with.

Even if the IT person you are working with has
changed over the course of the project, you need to
make sure they are invested in the project as you
are. Make it a little personal if you can, Rezac
advises. Have a “dedicated asset.” Find that one
person and make them your friend so they can
understand what you are doing.

Each IT person will have one section of a
project; nobody covers the whole thing. So, make
one person a point of contact. That opens up a
tremendous line of communication. If you have a
dedicated person at one point you don't have to keep
explaining what you are trying to do. Give them the
big picture and make sure they understand the
defined end-game.

IT is like a giant house with 10 owners, and
none them talk to one another or explain what they
are trying to do. So, there is often confusion.
Setting a clear expectation of what you expect from
them is really important.

IT can have its own language; it's important
to ask for clarification.

It's important to have adjustable timelines
for getting things done on a project, because not
everything can be done instantly. Security protocols
are constantly changing; it's important to know that
your timelines are going to change.

Often IT personnel are narrowly focused. Most
IT personnel are not flexible with their area of
expertise. But it is important to have an
agreed-upon language to implement, from vendors all
the way down to your end-users.

Attendee
Comments

"Convenience Care Explosion
Session: Practitioners were great -UCP insight was
excellent. Panel format is nice to hear a variety of voices"

"Great variety of real world
topics"

"Relevant!"

"Interactions between speakers/attendees throughout the day"

"Understanding deeper how strategic planning is done for HC
projects"

"3 morning sessions"

"Diversity in topics"

"Excellent challenges to traditional thoughts"

"Rise of Women in Healthcare Leadership was great - topical
content, articulate panel and moderator, and relatable"